He was speaking after William Hague and fellow EU foreign ministers formally took the decision in Luxembourg, suspending trade and aid sanctions which have isolated Burma for years, but retaining a long-standing arms embargo.
Mr Cameron called for sanctions to be "eased" when he visited Burma earlier this month for talks with democracy campaigner Aung San Suu Kyi after her landmark by-election victory on the back of moves by President Thein Sein to open up the country to political reforms.
In a statement the Prime Minister said: "I welcome today's (Monday's) decision by our EU partners to support the UK's call to suspend sanctions against Burma. As I saw for myself, President Thein Sein has taken important steps towards reform in Burma, and it is right for the world to respond to them.
"But those changes are not yet irreversible, which is why it is right to suspend rather than lift sanctions for good."
Earlier, Aung San Suu Kyi boycotted the opening of the new Burmese parliament in a political dispute signalling troubles still ahead along the path to democracy. Mr Hague, arriving for the Luxembourg meeting, says the latest dispute was another reason not to move too fast to completely lift sanctions despite the "very important process of change" in the country.
Suspending sanctions was "the right thing to do", he said, but cautioned: "Great progress is being made (towards opening up Burma), but we remain very concerned about conflict and human rights abuses in some ethnic areas of Burma."
Despite some fears that embryonic democratic change could already be faltering, the EU foreign ministers agreed now was the time for an effective gesture of support for the start of change, suspending sanctions for one year to restore the flow of trade and investment opportunities with Burma and open the door for EU development aid.
EU foreign policy chief Baroness (Cathy) Ashton, who is visiting Burma later this week, said the move was designed to support Burma to ensure that progress towards opening up the country becomes "irreversible".
A senior EU diplomat said: "What we have done is take an important step. This is now the opportunity for Burma for take further steps towards reform so that we can do more in the mid-term".
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